If you are retired, you do not have a source of income from a job--you rely on your savings, interest from investments, or the government (e.g., social security in the US). With a job, your salary typically increases every so often to track inflation. When you just have savings, the total value of your money stays the same while the purchasing power of that money decreases. Investment income on your savings (e.g., interest) counterbalances this effect somewhat and government programs typically give out more money to account for the effects of inflation, but neither of these counterbalancing measures may prove sufficient.
